Definitions for Diversificationdɪˌvɜr sə fɪˈkeɪ ʃən, daɪ-
This page provides all possible meanings and translations of the word Diversification
Random House Webster's College Dictionary
di•ver•si•fi•ca•tiondɪˌvɜr sə fɪˈkeɪ ʃən, daɪ-(n.)
the act or process of diversifying; state of being diversified.
the practice of manufacturing a variety of products, investing in several kinds of securities, etc., esp. as protection in an economic slump.
Origin of diversification:
1595–1605; < ML
the act of introducing variety (especially in investments or in the variety of goods and services offered)
"my broker recommended a greater diversification of my investments"; "he limited his losses by diversification of his product line"
the condition of being varied
"that restaurant's menu lacks diversification; every day it is the same"
The act, or the result, of diversifying
A corporate strategy in which a company acquires or establishes a business other than that of its current product
Origin: From diversificatio, from diversificatus, past participle of diversifico, from diversus + facio
the act of making various, or of changing form or quality
state of diversity or variation; variegation; modification; change; alternation
In finance, diversification means reducing risk by investing in a variety of assets. If the asset values do not move up and down in perfect synchrony, a diversified portfolio will have less risk than the weighted average risk of its constituent assets, and often less risk than the least risky of its constituent. Therefore, any risk-averse investor will diversify to at least some extent, with more risk-averse investors diversifying more completely than less risk-averse investors. Diversification is one of two general techniques for reducing investment risk. The other is hedging. Diversification relies on the lack of a tight positive relationship among the assets' returns, and works even when correlations are near zero or somewhat positive. Hedging relies on negative correlation among assets, or shorting assets with positive correlation.
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